Saturday, March 23, 2013
625.00-139_ms_river_port_barge_fertilizer.tif

Urea: Buyers’ Market After 2015?

AgFax.Com - Your Online Ag News Source


Rabobank has published a new research report on the global urea industry, forecasting structural change in the global urea market due to capacity expansion by key importers and low-cost players in the Middle East and Africa regions.

“Bursting the Urea Bubble,” the report authored by Rabobank’s global Food & Agribusiness Research and Advisory, predicts that global urea market is set to enter an era of oversupply post 2015. Finding include

  • Unprecedented acceleration in urea capacity expansion by key importers (the U.S., Brazil and India) and low-cost producers in the Middle East and Africa (MEA) will drive structural changes.
  • This capacity expansion is expected to improve the self-sufficiency of the top three importers and ensure that supply growth significantly outpaces demand growth, shifting the market into a buyers’ market towards 2020.
  • Ccompetition among traditional exporters in the MEA, China and the former Soviet Union (FSU) will intensify, resulting in price pressure and capacity rationalisation in high-cost regions.

“Attractive returns in urea production have resulted in a spurt in capacity expansion projects since 2007,” Rakhi Sehrawat , Rabobank analyst, commented. “The expansion is driven mainly by the exploitation of shale gas in the United States, new gas fields in Brazil, political incentives in India, and low-cost natural gas in the MEA. Over 65 new projects have been announced that will expand global urea capacity by 30 percent between now and 2020. This rush of activity on the supply side will have a strong influence on the urea demand/supply picture in the coming five to ten years.”

The urea production boom will impact players across its value chain, especially high-cost producers and traders. As the import reliance of the main urea destination markets declines and low-cost export-oriented capacity grows, competition among the traditional players/exporters will intensify, resulting in price pressure and capacity rationalization in high-cost regions. In this market, strategic routes of the urea value chain partners (i.e. producers and traders) would need to change to adapt to this new reality in the urea industry.

For high-cost producers it means they would need to strengthen their market position through cross industry partnerships and downstream integration closer to farmers. The study predicts that winners will be those who can achieve low costs of production and/or are placed close to a demand market,  enabling them to quickly respond to demand dynamics by altering production cycles. Market intelligence and access to growers will be key success factors in this case.

Lower volumes destined for key urea importers and a diminished role of high-cost exporters in the oversupplied market will have implications for traders. They will need to make the important decision of whether to expand their overall role in the supply chain through upstream or downstream integration or by maintaining focus on trading fertilizers but increasing sourcing of urea from the emerging competitive capacities.

Tags: , , ,


Leave a Reply

Name and Email Address are required fields. Your email will not be published or shared with third parties.

Sunbelt Ag News

    DTN Cotton Open: Futures Trading in Green4-16

    DTN Livestock Open: Hog Contracts Under Pressure4-16

    DTN Grain Open: Commercial Buying Boosts Soybeans4-16

    Weather Woes Stretch from Iowa to Florida — DTN4-16

    Keith Good: Cold Snap on East Coast Troubling; Wheat Futures Up Again4-16

    DTN Livestock Close: Cattle Futures Settle Moderately Lower4-15

    Doane Cotton Close: Market Gives Back Gains4-15

    Brazil’s Ports Remain Orderly with Good Luck, Favorable Conditions – DTN4-15

    Texas: Conservation Farming Meeting Weslaco, April 294-15

    Welch on Wheat: Cool Temperatures Hit Drought Stressed Crop4-15

    AFB Grain-Soybean Close: Wheat, Beans Surge Higher, Corn Slightly Mixed4-15

    AFB Cotton Close: Prices Move Lower4-15

    AFB Rice Close: Futures Mostly Lower4-15

    DTN Cotton Close: Loses Ground as Intercrop Spreads Narrow4-15

    N.C. State University Leads Research into Kudzu Bug Host Preferences4-15

    Welch on Grain: Corn Planting in Line with 30 Year Average4-15

    Fertilizer Prices on the Rise but Still Lower Than Last Few Years4-15

    DTN Grain Close: Bullish Crush Data Sends Soybeans Higher4-15

    USDA: Weekly National Peanut Prices4-15

    Louisiana: Wildlife Field Day, Clinton, May 34-15

    DTN Livestock Midday: Hog Prices Tumble Lower4-15

    DTN Grain Midday: Soybeans 14 to 19 Higher4-15

    Sign-Up Begins Today for USDA Disaster Assistance Programs4-15

    AgFax Cotton Review: Now’s a Good Time to Price New-Crop; Rains in Texas but Not Enough4-15

    DTN Fertilizer Trends: Rail Delays Affecting Prices in Upper Midwest4-15

    Shurley On Cotton: 80 Cents Is A Good Place To Start Pricing4-14

    Crop Progress: 3% of National Corn Crop Planted, Wheat Continues Decline – US-DA4-14

    Louisiana: Glyphosate Resistance Confirmed in Italian Ryegrass4-14

    Livestock: Rancher Raises Horns, Not Pounds for Rodeo Cattle – DTN4-14

    Good on Grain: Corn Consumption Continues to Exceed Projections4-14

    Rice Outlook: 2014 Prospective Plantings Up 16 Percent From Last Year4-11

    Rice Market: Prices Move Sideways but Down for the Week4-11

    Rice Crop Update: Texas 65% Planted; Delta Battling Wet Conditions4-11

    Rose on Cotton: ‘Buy the Rumor, Sell the Fact’4-11

    Texas: Multi-County Wheat Tour, Taylor County, May 24-11

    USDA Grain Outlook: Corn Export Prospects Increase4-11

    USDA Cotton Outlook: Global Stocks Continue to Rise4-11

    USDA Oil Crops Outlook: Record Soybean Acreage Heralds Upsurge for Stocks4-11

    USDA Wheat Outlook: Domestic Usage Down, Increased Ending Stocks4-11

    Crop Marketing: Sales Advised in Old-Crop Corn, Beans, Look for Rallies in Wheat, Cotton, Rice4-11

    Cleveland on Cotton: Waiting on Texas Rain as U.S. Carryover Adds Value to This Crop4-11

    Corn-on-Corn Planting Yields 25 Bushels Per Acre Less Than Rotation – DTN4-11

    Farmers Complain Rail System Gives Oil Shipments Priority Over Grain – DTN4-11

    Ethanol: RIN Generation Declines from 20134-11

    USDA: Peanut Price Highlights4-11

    Mississippi: Catfish Producer Meeting, Macon, April 304-11

    African Farmer Group Seeks Financial Self-Reliance4-11

    Corn Planting In South Further Delayed, More Talk Of Switching – AgFax4-11

    Who Really Owns Your Farm Data? – DTN4-10

    Implement Tires Earn Respect, New Technology – DTN4-10

    Brazil: Ag Ministry Raises Soybean and Corn Forecasts – DTN4-10

    WASDE Report Eases Fear of Low Crop Prices, Says Economist4-10

    Welch on Grain: Increasing Global Demand4-10

    California, Texas, and Kansas Counties Added as Natural Disaster Areas4-10

    Welch on Wheat: Domestic and Global Ending Stocks Raised4-10

    Rice Planting Drags Out; More Medium Grain Expected In Midsouth – AgFax4-10

    Texas: Multi-County Private Applicator Training and Testing, Harper, May 214-10

    Crop Insurance: State Distribution of Direct vs. Net Payments – 2004-134-10

    Texas: Grain Storage Safety Conference, Sinton, April 234-10

    Sunbelt Ag Events

    Rice News

     

    About Us

    AgFax.Com covers agricultural trends and production topics, with an emphasis on news about cotton, rice, peanuts, corn, soybeans, wheat and tree crops, including almonds, pecans, walnuts and pistachios.

      

    This site also serves as the on-line presence of electronic crop and pest reports published by AgFax Media LLC (formerly Looking South Communications).

        

    Click here to subscribe to our free reports.

      

    We provide early warnings and confirmations about pests, diseases and other factors that influence yield. Our goal is to quickly provide farmers and crop advisors with information needed to make better and more profitable decisions.

         

    Our free weekly crop and pest advisories include:

    • AgFax Midsouth Cotton, covering cotton production and news in Alabama, Arkansas, Louisiana, Mississippi, Tennessee and Missouri.

    • AgFax Southeast Cotton, covering cotton production and news in Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia.

    • AgFax Southwest Cotton (new for 2013!), covering cotton production and news in Texas, Oklahoma, Kansas and New Mexico.

    • AgFax West (formerly MiteFax: SJV Cotton), covering California cotton, alfalfa, tomatoes and other non-permanent crops in California's Central Valley.

    • AgFax Rice covering rice production and news in Arkansas, Louisiana, Mississippi, Missouri and Texas.

    • AgFax Peanuts, covering peanut production in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas and Virginia.

    • AgFax Southern Grain: covering soybeans, corn, milo and small grains in Southern states.

    • AgFax Almonds, covering almonds, pistachios, walnuts and other tree crops in California's Central Valley.

    • AgCom 101, providing guidance to ag professionals involved in social media.

    Our newsletters are sponsored by the following companies: FMC Corporation Chemtura Dow AgroSciences.

          

    Mission statement:

    Make it as easy as possible for our community of readers to find and/or receive needed information.

              

    Contact Information:

    AgFax Media. LLC

    142 Westlake Drive Brandon, MS 39047

    601-992-9488 Office 601-992-3503 Fax

    Owen Taylor Debra L. Ferguson Laurie Courtney

          

    Circulation Questions?

    Contact Laurie Courtney